Money Tips for Young Adults
How much do you really know about money?
According to a recent study conducted by the education technology company EverFi, the average U.S. college student can only answer about one third of basic financial questions. The survey also found that this demographic has decreased their likelihood of engaging in responsible fiscal behaviors such as following a budget, paying bills on time and investing in general.
Entering into your twenties is one of the most important periods for establishing good money management practices and building credit. Investing time into understanding your finances can help you lay the groundwork for smart banking habits.
Keep the following 10 Money Tips in mind when establishing your finances now:
Ask yourself twice
- Before you invest in a big-ticket item such as the cruise you've always wanted to go on or the dream car you've been eyeing, consider its cost implications. Ask yourself, "Do I really need this?" If the answer is a no, now may not be the best time.
Credit card debt is not the same as credit history
- Many young adults believe that charging numerous purchases to a credit card helps build credit, but it really just detracts from it. Simply opening a credit card and using it sparingly, such as for an emergency, can help build credit without racking up debt.
Do you have a 401(k)?
- Don't think you need to open a 401(k) now and that you have the rest of their lives to save for retirement? By not investing in retirement as soon as possible, you are missing out on a great amount of savings as well as potential employee matching at your place of work.
Don't be afraid to negotiate salary
- Accepting a job right out of college is a great feeling, but not being compensated fairly never is. Although you may be excited to jump into the job market, be sure it pays enough for you to live within your means and save as well. Preparing a specific figure or range beforehand can make quite the difference during negotiations.
Kids are expensive
- Raising a child, not including college and pregnancy costs, sits at a whopping quarter of a million dollars right now. If you're thinking of having kids soon, or sometime in the future, saving now should be a small part of your overall monthly savings.
Know what you're saving and how much interest it is creating
- Be sure to determine how much you can realistically save each month and hit the target each time. Although major life events can occur that may affect this, having a set amount will make it easier in the long run to track savings and the interest it accrues over time.
Identity theft can happen to you
- Identity theft can wipe your bank account clean in seconds. Be sure your personal information is protected with passwords, non-revealing information and by an institution capable of keeping both your identity and finances safe.
Make the right investments
- If you're going to try your hand in the stock market, be sure you actually understand it first. The same goes for investing in a startup or other company. Likewise, only buy a home or other large purchase if you're really ready, not just because all your friends are doing it or Mom and Dad think it's a good idea.
Understand all student loan options
- There are many types of loans out there, both private and government, subsidized and unsubsidized. Take the time to understand each type before you decide and continue to review its regulations during your terms.
Where is your emergency savings?
- No matter how old you are, an emergency account should always be established to ensure wiggle room in case of an unforeseen event. Being prepared is as easy as setting aside a few dollars a week or gradually moving more money toward a savings account.
BONUS TIP: Ask For Help
If you're unsure of your financial situation, need to make a change or desire to begin your savings journey; don't be afraid to reach out for help.
Contact a Bethpage expert today to help you get started on the right track!
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